Pagero Guide toe-invoice Adoption

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IntroductionThe current economic climate increases pressure on businesses, both public and private, to cut costs and increase efficiencies. Companies are focused on lowering administrative costs while increasing accuracy, compliance and control. By introducing e-invoicing, organisations can reduce costs and increase productivity at the same time, as they are able to reduce time consuming manual work and pay more attention to control and business strategy.

What is an e-invoice?

A genuine e-invoice is an invoice that is issued,

received and processed electronically. It is digital

from its creation in the financial system by

the issuer until it is received, processed and

archived by the recipient in theirs. In other

words, a genuine e-invoice is digital all the way.

• Receive order• Create invoice• Print• Postage• Wait for payment• Archive

• Receive invoice• Manual handling/date entry• Validation and verification• Matching• Authorization• Payment• Archive

The paper invoice process

The e-invoice process

Leverantör Kund

• Receive order• Create invoice• Print• Postage• Wait for payment• Archive

• Receive invoice• Manual handling/date entry• Validation and verification• Matching• Authorization• Payment• Archive

Leverantör Kund

Why implement an e-invoice policy?There are many reasons why an organisation may consider introducing an e-invoicing policy:

1. Awareness through research or the media of the value benefits of e-invoice adoption2. A desire to incorporate an e-invoice policy to align with the green or cost saving strategies of the organisation3. Seeing adoption of an e-invoicing policy by a competitor4. Evaluating the benefits when a supplier wishes to start sending invoices electronically to the organisation5. Getting a request from a customer to send them invoices electronically6. Compliance with forthcoming legal requirements as governments mandate the use of e-invoices

The e-invoice implementation processThere are six steps involved in implementing a successful e-invoice strategy:

1. Define initial scope Alignment with business strategy for efficiency improvements and cost savings

Quantify invoice volumes and number of customers/suppliers involved

Examine capabilities of financial system to sup-port e-invoices

Define potential ROI

2. Develop business case Decide between inbound or outbound invoicing

Outline current process

Quantify cost of current process

Determine level of process/people change

Determine cost savings/efficiences

Define requirements

3. Establish project and prepare design planSelect project leader and cross functional team

• Analysis• Concept• Investment

Implementation

Move to internal adoption

Trial/pilot with primary business partners

Buy in and adoption at all levels essential

Start onboarding suppliers/customers

4. Test and implement solution

5. Go live and roll out

6. Review success Success factors

Having identified a need to introduce e-invoicing, an organisation will begin a process of examining the appropriateness of an e-invoicing policy for their organisation, and should:

1. Review the policy in the context of their current business strategy2. Examine the requirements for both outbound and inbound invoicing3. Determine the quantity of invoices sent and received on an annual basis4. Determine the number of suppliers or customers involved5. Investigate the ability of their existing ERP/accounts system to handle e-invoices

1. Define initial scope

2. Prepare a business case for e-invoice adoption

Having carried out an initial review of the appropriateness of e-invoice adoption, a business case should then be prepared to closely examine the likely costs and benefits to the organisation of introducing an e-invoice policy. The business case should include the following:

1. A decision on whether the project should focus on outbound or inbound invoicing2. An estimation of the business resources attributable to the selected invoice flow3. A full description of the current paper based process4. Identification of current processes that can be either improved, outsourced or eliminated5. The capabilities of existing ERP/accounts system to handle e-invoices6. An outline of potential cost savings and efficiencies attributable to e-invoice adoption by the organistion7. An estimate of the costs and resources involved to implement the project8. When the business case has been reviewed and approved by the senior management of the organisation,

appropriate resources need to be allocated to deliver the project within a specified time frame

3. Establish project and prepare design planSelect the project teamChoose a pro-active project leader and cross- functional team to prepare a detailed project plan. The team should report to an executive sponsor and consist of experienced, knowledgeable members who are involved in the process. Outbound e-invoice project recruit team members from Sales, Finance, IT and Credit Control, and for an inbound project, from Purchasing, Finance and IT.

Prepare a detailed project planThe project plan should contain an analysis of the current business processes and environment. Based on this analysis a solution concept can be developed and an implementation plan outlined. Read more below:

Analysis

• Determine a strategic focus for the project and outline priorities• Identify obstacles to adoption and how to solve them• Analyse invoice flows, internal processes, systems and departments/divisions in the organisation• The 80:20 rule does not apply to invoice streams, except in very few industries. For example,

in a medium size organisation, the number of suppliers sending more than 100 invoices per year is usually between 20-50.

The vast majority of suppliers and customers of any organisation are SMEs with a varying degree of IT expertise. Business partners can be located in various countries with different legal constraints regarding tax compliant invoices.

Following the analysis of trading partners, the internal workflow needs to be examined. Introducing e-invoicing provides an opportunity to re-examine work practices that have evolved over time, which can now be changed to reflect developments in the organisation and improvements in technology. Some processes can be changed or even removed, while others like archiving can be outsourced. Some departments or divisions may have special requirements that need to be considered, while others may be ideal early adopters in the organisation.

Solution concept

Based on the analysis carried out on the company’s abilities and needs, a number of solution scenarios will evolve. Many of the leading ERP systems have workflow modules that can be deployed throughout the organisation. It is also possible to develop workflow elements in-house or buy in a solution that sits on top of the ERP that only sends approved invoices to the accounts system for payment.

Investment

Depending on which scenario is selected, an estimate of the required investment and operational costs can be determined and a roll out strategy prepared. This may require an upgrade of the company’s existing ERP system or deployment of additional software such as a workflow solution.

• Decision on Make or Buy elements of the solution• Step-by-Step or Big Bang approach• Examine solutions from various service providers• Obtain quotations from Service Providers for elements of solution to be provided by them• Approve Solution Provider

Following the preparation of a detailed project plan outlining all aspects of the project and its approval by senior management, the project team can start the implementation process:

• Develop new internal processes

• Obtain internal adoption of new processes• Implement solutions being provided by third parties• Test systems and processes• Trial/pilot with primary business partners

4. Test and implement solution

Effective internal and external communication is essential prior to go live, because buy in and adoption at all levels of the organisation is critical for a successful roll out strategy.

Internal• Senior management’s support for the project needs to be communicated to all staff• Seminars outlining the projects objectives and implementation should be arranged for all departments• Workshops should be held for staff directly affected by the change in processes

External• Announcement to all suppliers/customers about the company’s e-invoice policy and implementation time lines• Include outline of policy in procurement section of web site• E-invoices to become mandatory for all future procurement contracts• Include e-invoices as an agenda item in all supplier reviews• Arrange seminars for key trading partners• Communication by letter/email to targeted supplier/customer groups of the company’s wish to receive e-invoice

or their ability to send e-invoices when required

5. Go live and roll out

Success factors in e-invoice projects• Awareness and buy-in by senior management• Full management support• One very active project owner• Define a three-year objective/strategy, but imple-

ment it in a step-by-step approach with a quick win for step 1

• Good internal and external communication to people affected

• Be a rollout champion with an “opt out” strategy combined with active marketing

6. Review

• Be realistic regarding mid- and long-term technical capabilities of the organisation including work-flow and archiving

• Don’t re-invent the wheel and develop existing solutions that are available at a fixed price and which have been well tested in other companies

• Be realistic regarding the technical capabilities of trading partners to send, receive and archive e-invoices

Pagero Group develops and markets Pagero Online, a cloud based network platform for communication of business documents within the purchase-to-pay, order-to-cash and logistic-to-pay (TMS) processes. Pagero Online is independent of ERP system and suits companies of all sizes and within all industries.

Our value-added services enable our customers to achieve accurate data and obtain a 100% digital inbound and outbound business document flow, resulting in minimal error handling, compliance with local VAT regu-lation and control over company spend. Pagero Online is also interconnected with an extensive number of other networks for global reach.

Pagero Group has over 190 employees with headquarter in Gothenburg, Sweden and offices in Stockholm, Oslo, Copenhagen, Helsinki, London, Dublin, Amsterdam, Rome, Madrid, Paris, Istanbul and Dubai.

About Pagero

Pagero London, UK

Pagero UK Ltd116 Great Portland StreetLondon W1W 6PJ

Postal address:PO Box 149BRIGHTON BN41 9DW

Phone:+44-7710 083 196 (Oscar Wegland, Country Manager)

Contact us

Pagero Dublin, Ireland

Pagero Ireland17 Corrig RoadSandyford Industrial EstateDublin 18

Phone:+353-76 680 56 06

Pagero Gothenburg (HQ)

Pagero GroupVästra Hamngatan 1SE-411 17 Gothenburg

Postal address:Box 11006SE-404 21 GÖTEBORG

Phone:+46-31 730 88 00

E-mail: info@pagero.com

www.pagero.com